Introspect on GST: The CAG report flags the impact of an imperfect GST Network

|
Updated on
August 06, 2019
Published on
August 06, 2019

×

Small businesses still suffer overheads on account of GST compliance

The irony here is hard to ignore: GST was introduced two years back to make it easier for businesses to pay their taxes, but today they are as befuddled as ever by the GSTN portal which forces them to upload form after form, besides micro-level transactional detail. The recently released CAG report on GST implementation spells out some of the trouble spots. It says: “On the whole, the envisaged GST compliance system is non-functional. The deficiencies in the GST system also point to a serious lack of coordination between the Executive and the developers.” The number of GSTN 1 return filers (the form that requires invoice level details) is far less than those filing GSTN 3B (the form that calls for gross details). This can be attributed to hassles in uploading the details for GSTN 1, and not — as the bureaucrats running the show seem to believe — to any general tendency to evade taxes. If “all returns being filed showed a declining trend of filing from April 2018 to December 2018” the blame lies clearly with the GST Network that continues to flounder without being held accountable. The so-called simplified format of uploading returns, supposed to be introduced in a couple of months, is full of rows and columns, with needless details being sought. In fact, online invoice matching, and the assumption of suspicion underlying it, should be reviewed. Rather than merely create a quarterly filing option for small businesses (below ₹5 crore turnover) and offer them a flat rate of tax under the ‘composition scheme’, GST filing rules should be streamlined for all. Small businesses still suffer overheads on account of GST compliance (which includes filling forms in English without any other language option), despite efforts to simplify processes for them.

While the CAG report has highlighted ‘technical’ lapses, the big picture is of GST per se being a complicated affair. The rates, well above 10 in number, are higher than such systems elsewhere in the world. The GST Council has not helped by creating dual systems in certain sectors such as real estate, where 5 per cent can be paid without claiming input tax credit and 12 per cent with ITC. The unorganised sectors continue to operate below the radar not necessarily because they wish to do so, but because the rates are high, more so if they have to remain under the composition scheme where tax credit is ruled out, and compliance formalities daunting.

At the federal level, the CAG points to IGST dues not being paid on time to States, some ₹2.11-lakh crore in 2017-18. This could disrupt the existing consensus over GST reforms. The Council must focus on lowering rates and simplifying processes, restoring the raison d’etre of this remarkable step forward in easing the conduct of business.

Customize your preference and get a personalized recommendation of stories based on your interest.

Hurry! Prices Increase Soon

Published on
August 06, 2019

A letter from the Editor

Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!